Military Embedded Systems

Managing ITAR compliance in COTS systems design


May 29, 2012

Curtis Reichenfeld


A Commodity Jurisdiction (JS) request can keep COTS vendors in the right "places" with regard to International Traffic in Arms Regulations (ITAR) export violations.

As foreign sales continue to be a key driver for many U.S. vendors, it is critical to ensure due diligence of the International Traffic in Arms Regulations (ITAR) to avoid profile violations and penalties.

ITAR is the set of export control regulations implemented and enforced by the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) that controls the export of defense articles, defense services, and technical data as designated on the U.S. Munitions List (USML). Under ITAR, defense articles are items specifically designed, developed, or manufactured for military or defense purposes. These include commercial items that have been modified for a military purpose. Certain technical assistance services related to defense or military purposes are known as defense services. Defense services can include activities such as repairs, training, engineering, testing, and product assembly. Technical data might include documents, drawings, schematics, design information, data sheets, and so on that reveal technical data directly relating to items on the USML.

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) implements and enforces the Export Administration Regulations (EAR) that regulate the export and re-export of most commercial items. This includes “dual-use” items with both commercial and military or proliferation applications. It also includes purely commercial items without obvious military use. License requirements depend upon an item’s technical characteristics, the destination, the end user, and the end use. The exporter must make the determination if an export requires a license. While other regulations can be relevant, the EAR and ITAR are the most frequently applied and regularly encountered sources of control for high-technology industries.

Typically, manufacturers can self-classify their items by reviewing the ITAR and EAR. If the manufacturer is uncertain of an item’s classification, they can get assistance by submitting a Commodity Jurisdiction (CJ) request to DDTC. A CJ is a process that outlines how export control jurisdiction is determined, which is the first step in analyzing an item’s overall export control classification. DDTC, in cooperation with BIS, can classify the product as “dual use,” which includes civil and some military applications, or “commercial,” and can further provide the full classification number. Neither dual-use items nor commercial items fall under the ITAR.

Product development process

ITAR issues should be considered during the product development process, before design and manufacture, to ensure equipment is ITAR free. At Curtiss-Wright Controls Defense Solutions, during the first part of an IRAD approval process, we focus on a product’s high-level requirements. Product descriptions should be written with the ITAR in mind and then reviewed by export compliance experts. Involve the export control officer early to make a determination if the product can be classified as ITAR free.

During product design, use commercially available components and software algorithms to reduce the risk that the product can fall under the ITAR. If commercial parts are not available or the application requires military-grade chips, companies need to follow the regulations and can apply for a CJ.

Common mistakes

Some of the common compliance errors COTS vendors need to avoid include:

  • Failure to hire a compliance expert – Hiring a dedicated export control officer experienced in working with the Department of State and ITAR is essential for ensuring compliance.
  • Failure to maintain detailed records – Start with an export compliance plan and keep detailed records documenting the plan implementation, including any self-classifying of products. CJ applications also require providing records of product background and sales information. Documentation associated with all exports of items or defense articles, defense services, and technical data must be retained by the exporter.
  • Reclassification of products – Legacy products might need to be reclassified as items fall off the ITAR USML or EAR Commerce Control List. Export control officers should review products regularly and determine if classification or application for a CJ is needed.
  • Too focused on sales – Many companies, while focusing on sales and generating new business, lose sight of ITAR compliance. They need to dedicate the appropriate time for reviewing products and obtaining licenses in advance of a sale.
  • Poor training – Proper training and awareness ensure that employees understand ITAR compliance and know to ask the proper questions when they experience issues with products that could be controlled items. Companies need to document an export compliance plan that is tied to company procedures and then invest in training.

Ignorance of the ITAR is not a valid defense against violations of the regulations. When in doubt, apply for a CJ determination to ensure the jurisdiction of products and seek the assistance of an experienced export compliance person to determine export license requirements. With proper due diligence, new markets for U.S. companies are available worldwide.

This column is a synopsis of a high-level white paper written by Curtis. For more information, e-mail Curtis at [email protected].


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